Good demand, but mainly supply limitations of ethylene oxide and derivatives have created unusual volatility and historically high prices for glycols and derivatives in the US and Europe. Markets are expected to normalize during the second half of 2021, but there are still factors that will prevent pre-pandemic levels in the coming months.
We analyse the reasons for tight markets of EO in Europe and America, high prices for derivatives in Europe, and how economics in the chain affect DEG and TEG prices in North America.
Main market drivers for ethylene oxide: Integrated EO producers have maximized the use of the limited EO depending on their industrial flexibility, commitments and netbacks of the different products. Demand for each glycol or derivative in each region continues to behave differently due to changes in individual and industrial consumption habits, supply chain disruptions and volatility in crude oil Brent values.
Regions that depend on imports have suffered from limited availability at origins and logistic disruptions. Profitability of the industry has been driven by uneven variations in ethylene and ethylene oxide in each region. New ethylene oxide capacities are ready to start in Europe and the US, along with new projects just announced.